Increasing the national minimum wage is illogical

Commenting on the announced increase to the national minimum wage, Mark Littlewood, Director General at the Institute of Economic Affairs, said:

“The minimum wage is a blunt instrument. Legislated pay hikes can privilege those in work, but make it harder for those outside the labour market to get their feet on to the employment ladder.

“To make it illegal to offer work at £6.30 per hour or less will make things harder still for the old, the young and the poorly educated. The regional breakdown of unemployment is evidence of the negative effects of the minimum wage. If it is unfeasible to scrap the national minimum wage entirely, it should at least be regionalised.

“The real poverty in our society lies with those who are not in work at all, and a 2% increase in the national minimum wage will do nothing to improve their chances of a job – rather the reverse. Although the coalition insists that growth is its top priority, once again it embraces policies which will tend to impede economic growth rather than encourage it.”

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.